TRENDS

Traditional CSPs must evolve now or get left behind

Network virtualization is a powerful tool for CSPs willing to transform to digital service providers but the window of opportunity is limited.

Disaggregation that happened to IT a decade ago (from mainframes to desktop cloud) is now set to happen to the network. Software has once again disrupted the traditional integrated value chain.

Enterprise network functions previously delivered on the NEP’s equipment, over connectivity supplied by Communications Service Providers (CSPs), is now being delivered directly “as-a-Service” by almost anyone using standardized, virtual/software functions.

While some in the telecom industry have been resistant to the notion that enterprise clients are seeking to pursue this virtual option, new Accenture research finds the market is ripe for network virtualization.

With the virtualization wave set to hit the network in the next couple of years, evolving from a traditional services provider to an Integrated Service Provider is a complex task. Here are three key insights CSPs should consider if they want to win against the digital giants to become a disrupter, rather than the disrupted.

Limited window of opportunity for CSPs. Movement toward virtualization is happening swiftly. Businesses plan to invest 20-30 percent of their IT budget in network virtualization in the next three years. Two-thirds plan to adopt network virtualization for all network services with 12 percent planning a “big bang” migration. As enterprises move ahead with network virtualization, CSPs must be ready or enterprises will look elsewhere.

Software-defined networking is powerful transformational tool. Several CSPs have seized the opportunity and begun to offer network virtualization services for business customers. However, they’re still in the vanguard. Software-defined networking can be a powerful item in their toolkit—by providing significant new revenue opportunities through added services to enterprise clients, while enabling new cost savings and improvements in operational efficiency.

Evolution to Integrated Digital Service Provider requires major changes. For CSPs to take advantage of this opportunity, the technology transformation required to become an Integrated Digital Services Provider (IDSP) will necessitate a much wider business transformation affecting multiple areas, ranging from people, operations and process to customer experience and product. This complex task will require significant help from a large, neutral transformation partner.

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